US Department of Justice

Office of Community Oriented Policing Services

 Fact Sheet www.cops.usdoj.gov

Indirect Cost Rate for FY 2018 Awards

COPS Office programs

If you are requesting indirect costs under a COPS Office 

program that allows those costs, a copy of your agency’s 

most current, signed, federally approved Negotiated Indirect 

Cost Rate Agreement must be included with your application, or it must be noted in your budget narrative that you 

have never received an indirect cost rate. If the rate agreement is expired at the time of application, then you should 

submit documentation demonstrating that the rate is under 

review by your cognizant federal agency. If your agency 

requests indirect costs for a COPS Office award based on an 

expired rate, your agency may not draw down funding for 

indirect costs until the current approved rate agreement or 

an approved extension is submitted to the COPS Office. In 

addition, if your agency’s rate agreement expires or changes 

during the award period, you must submit the new rate 

agreement or approved one-time extension from your cognizant federal agency to the COPS Office.

What are indirect costs?

Indirect Facilities & Administrative (F&A) costs are costs 

incurred for a common or joint purpose benefiting more 

than one cost objective. They are not readily attributable to 

the cost objectives that are being benefited. To facilitate equitable distribution of indirect expenses to the specific 

cost objectives, it may be necessary to establish a number 

of pools of indirect (F&A) costs. Indirect (F&A) cost pools 

must be distributed to benefited cost objectives on bases 

that will produce equitable results in consideration of relative 

benefits derived.1

1 See 2 C.F.R. § 200.56 in the Uniform Administrative Requirements, Cost 

Principles, and Audit Requirements for Federal Awards, as adopted by the US 

Department of Justice in 2 C.F.R. § 2800.101.

What is an indirect cost rate proposal?

An indirect cost rate proposal as defined in 2 C.F.R. § 200.57 

is the documentation prepared by a nonfederal entity to 

support its request for the establishment of an indirect cost 

rate, as described in Appendix III to 2 C.F.R. Part 200, Indirect (F&A) Costs Identification and Assignment, and Rate 

Determination for Institutions of Higher Education (IHEs) 

through Appendix VII to 2 C.F.R. Part 200, States and Local 

Government and Indian Tribe Indirect Cost Proposals.

Indirect (facilities & administrative (F&A)) costs are costs 

incurred for a common or joint purpose benefiting more than 

one cost objective. They are not readily attributable to the 

cost objectives that are being benefited.

There are several types of indirect cost rates:

 Final rate is applicable to a specified past period that is

based on the actual costs of the period. A final audited rate

is not subject to adjustment.

 Fixed rate has the same characteristics as a predetermined

rate except that the difference between estimated costs

and actual allowable costs of the covered period is carried

forward as an adjustment for a future period.

 One-time extension allows your agency to apply for a

one-time extension of a negotiated indirect (F&A) cost

rate. The negotiated cost rate may be extended for up

to four years. Once your cognizant federal agency has

approved an extension for indirect costs, you must abide

by the rate for the agreed-upon time period. No further

negotiations regarding indirect cost rates may occur until

the extension has expired. At the end of the extension

period, you must negotiate a new indirect cost rate.
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Indirect Cost Rate for FY 2018 Awards

 Predetermined rate is applicable to a specified current or 

future period and is not subject to adjustment. A predetermined rate may be used where there is reasonable assurance that the rate is not likely to exceed a rate based on 

the agency’s actual costs. Predetermined rates may not be 

used by governmental units that have not submitted and 

negotiated the rate with the cognizant federal agency.

 Provisional rate is a temporary rate applicable to a 

specified time period that is used for funding, interim 

reimbursement, and reporting of indirect costs pending 

establishment of a final rate for that period.

 De minimis indirect cost rate provides the option 

for certain nonfederal entities that have never received a 

negotiated indirect cost rate to accept a flat rate of up to 

10% of modified total direct costs (MTDC). MTDC can 

include all direct salaries and wages, applicable fringe benefits, materials and supplies, services, travel, and up to the 

first $25,000 of each subaward (regardless of the period of 

performance of the subawards under the award). MTDC 

excludes equipment, capital expenditures, rental costs, 

tuition remission, scholarships and fellowships, participant 

support costs, and the portion of each subaward in excess 

of $25,000. Other items may only be excluded when 

necessary to avoid a serious inequity in the distribution 

of indirect costs and with the approval of the cognizant 

federal agency for indirect costs.

How does an agency establish an indirect 

cost rate?

If your agency does not have a previously established indirect 

cost rate, your agency can obtain a rate by contacting your 

agency’s cognizant federal agency, which will review all documentation and approve a rate for the covered time period. 

For more information on the requirements for development 

and submission of indirect (F&A) cost rate proposals, please 

refer to 2 C.F.R. § 200.414 (e) and Appendices III – VII to 

2 C.F.R. Part 200.

What is a cognizant federal agency?

Cognizant federal agency for indirect costs as defined in 

2 C.F.R. § 200.19 is the Federal agency responsible for 

reviewing, negotiating, and approving cost allocation 

plans or indirect cost proposals on behalf of all Federal 

agencies. The cognizant federal agency for indirect cost is 

not necessarily the same as the cognizant federal agency for 

audit. The COPS Office is not a cognizant federal agency. 

For nonprofit, state, local, and tribal governments your 

cognizant federal agency is generally the federal agency that 

provides your organization with the most federal financial 

assistance. For assignments of cognizant federal agencies, see 

the following:

1. For institutions of higher education: Appendix III to Part 

200—Indirect (F&A) Costs Identification and Assignment, and Rate Determination for Institutions of Higher 

Education (IHEs), paragraph C.11.

2. For nonprofit organizations: Appendix IV to Part 200—

Indirect (F&A) Costs Identification and Assignment, and 

Rate Determination for Nonprofit Organizations, paragraph C.2.a.

3. For state and local governments: Appendix V to Part 

200—State/Local Government and Indian Tribe-Wide 

Central Service Cost Allocation Plans, paragraph F.1.

4. For Indian tribes: Appendix VII to Part 200—States and 

Local Government and Indian Tribe Indirect Cost Proposal, paragraph D.1.

What should an agency do if its indirect 

cost rate expires or changes during the 

award period?

If your agency’s approved indirect cost rate agreement expires 

during the award period, a current approved rate agreement 

must be obtained from the cognizant federal agency and 

submitted to the COPS Office. The agency must advise the 

COPS Office of any changes to its approved indirect cost 

rate during the award period and, if necessary, request a 

budget modification that reflects the rate change. Please 

contact your COPS Office Grant Program Specialist or 

Program Manager to determine when a budget modification is necessary.
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Indirect Cost Rate for FY 2018 Awards

If the agency experiences an increase or a decrease in its 

indirect cost rate, it should submit the new rate to the 

COPS Office within 30 days of the change.

Can an agency reprogram indirect costs 

to direct costs?

Reprogramming requests of indirect costs to direct costs are 

administered through the budget modification process for 

the specific COPS Office award that your agency received. 

Please contact your COPS Office Grant Program Specialist 

or Program Manager to obtain guidance on any additional 

requirements that may apply to your modification request. 

The COPS Office will then evaluate your request and notify 

you, in writing, of our decision.

Please be advised that if your agency’s revised indirect cost 

rate is lower than the rate approved at the time of award 

and a formal budget modification was not approved, excess 

indirect cost rate funds should not be drawn down and will 

be deobligated at closeout.

What should an agency expect at the 

end of the award period regarding its 

indirect costs rate?

If a provisional indirect cost rate is in effect at award closeout, the recipient shall proceed with closeout but will complete an expenditure analysis upon receipt of the approved 

final indirect cost rate to determine if an adjustment is necessary. If the recipient drew down excess COPS Office funding 

for indirect costs, the recipient must return the overpayment 

to the COPS Office and submit a revised Federal Financial 

Report (SF-425). If the recipient incurred additional indirect 

costs, the recipient may request a budget modification if 

the award is still open and award funds are available. If the 

recipient returns or draws down COPS Office funding, the 

recipient will need to submit a revised final Federal Financial 

Report (SF-425).

Other important factors

To support the indirect cost rate agreement, recipients are 

responsible for ensuring independent audits are conducted 

in accordance with existing federal auditing and reporting 

standards set forth in 2 C.F.R. Part 200, Subpart F - Audit 

Requirements. A copy of the audit report must be submitted 

to the cognizant federal agency to support the indirect cost 

rate agreement.

In accordance with ensuring proper award management and 

use of funding awarded through the COPS Office, recipients 

may be selected for a site visit or an enhanced office-based 

grant review (EOBGR) or may need to address an alleged 

noncompliance complaint during a compliance review by 

the COPS Office Grant Monitoring Division.

Therefore, recipients must adhere to proper accounting practices and recordkeeping to ensure all necessary documentation is available for review if requested by the COPS Office. 

Noncompliance may result in the repayment of misused 

funds, suspension of funds, or other remedial actions available by law until the noncompliance is resolved.

Contact the COPS Office

If you have any questions regarding the federal requirements that guide indirect cost rates, please refer to the 

applicable COPS Office Award Owner’s Manual or contact your COPS Office Grant Program Specialist or Program Manager.

For more information about COPS Office programs, please 

contact the COPS Office Response Center at 800-421-6770 

or by e-mail at AskCopsRC@usdoj.gov or visit the COPS 

Office online at www.cops.usdoj.gov.

Published 2018